I’ve recently gone through a baptism of fire dealing with a legal situation and mind-boggling lawyer bills. As someone sitting in the accounting world, there’s always conversation and education happening around pricing but while my wallet was deeply bruised, I was impressed with how the lawyers billed.

Some lawyers offered an initial, free meeting. This turned out to be purely an information-gathering exercise. The person I spoke to could not respond to even the basic legal question, so it was a one-way conversation. Ironically, when I stepped through to the paid conversation, it still seemed they were not across all the information I’d previously provided.

I was required to pay a five-figure deposit up front into a trust account.

Then, once the bills started coming in, I figured out they were charging me A$65 for every single email they received from me. They would then respond to the email to advise me how much it would cost for them to answer the email.

Within a short time, I was issued with a three-tiered quote that ranged from A$22,000 to A$132,000, with the proviso that all costs may double so I could end up with a A$264,000 bill, with the possibility of additional costs on top of that, for silks and the like.

My mind was a little blown apart by this ordeal and it made me wonder how technology can help accountants make smarter pricing decisions, for ourselves and for our clients. I do think a lot of accountants tend to both undercharge and be slow to receive payment.

Building pricing intelligence with automation

It’s good to have a general awareness of the macro-economic environment. Create a channel called ‘Economic alerts’ in your inbox, Slack or Teams and link it to information like Stats NZ statistical releases or the Australian Bureau of Statistics (ABS), using email or an RSS (really simple syndication) feed. The data can aid in building pricing models, keeps teams aware of the macro-economy and can be referenced in line with price increase announcements to soften the blow. For example: ‘It’s been X period since our last price increase and this increase is in line with the consumer price index (CPI) increases of X%’.

I’m a big fan of using receipt-scanning devices for inputting bills and receipts. Pushing bills and receipts into your general ledger (GL) on a timely basis assists in up-to-date expense and cost data. This can be categorised and assigned to projects accordingly, which aids in determining the current profitability of clients and projects. The quicker an issue is identified, the quicker you can react and rectify it. Dext has a client dashboard activity and stats reports that can help you track transaction volume levels, with any significant changes potentially triggering pricing reviews.

Managing margins and mastering value

Solutions like XBert have inbuilt health checks that do a deep dive in the data analytics to see what’s actually going on in the client’s accounting file, in the pre-engagement stage. This enables practitioners to price strategically because they know the client’s data quality, volume and accounting methods. Without getting your hands dirty, you’re alerted to the possibility of clean-up work which can be built into the initial pricing.

Of course, I recommend charging for a data-quality health check because while the grunt work is done by the robots, you are the professional analysing and presenting the outcome. The details can be exported into a report and discussed with the client, adding transparency to the pricing discussion.

This process also helps you understand if the client knows what’s actually going on in their own data file. If they present it saying it’s clean and up to date and you discover a hairball mess, the disparity suggests they may not appreciate the value of your services.

Tools that make data your pricing ally

Moving from spreadsheets to a centralised project-management and job-tracking system like Projectworks, Simpro or WorkGuru can help you forecast the cost of a project, provide a deeper understanding of individual project margins, help price similar projects and aid in understanding the profitable work that you should be taking on. Solutions like WorkGuru can build in inflation and pricing volatility at a job level to support data-informed pricing decisions and help you avoid underpricing projects.

For example, if a business is operating in a multicurrency environment, it’s essential that robust multicurrency features are automatically adjusted to dynamic exchange rates, at least daily. Manually updating exchange rates in spreadsheets is tedious, error prone and, if left unresolved, can be a blind spot. A comprehensive analysis of a small business that imported flowers revealed profits were due to the exchange rates, not selling flowers. So, while the business was cash-rich and profitable, its future was precarious and dependent on something outside its control.

Payroll is a significant expense for many businesses and a robust payroll solution – with smart rostering tools that, for example, avoid overtime spikes – can aid in accurately tracking real-time labour cost data and allocating expenses accordingly, which helps price jobs and services correctly. I wanted to highlight technology that we might not automatically think about when it comes to pricing, but when it comes to strategic pricing we should lean into the fabulous management-reporting and analysis solutions available to us. Solutions like Fathom, Spotlight Reporting or Vibe CFO include what-if scenarios which we can use to model hypothetical situations and pressure-test our pricing.

Confidence, clarity and the courage to charge

The legal labyrinth showed me confidence in pricing is unapologetic, structured and backed by process. As accountants we are custodians of the business data. Using smart tech, we should embrace strategic pricing decisions to ensure that we are both valued and profitable on a client-by-client or project-by-project basis.

Take away

For a video on how to harness the transformative power of ChatGPT to help with accounting and pricing go to: charteredaccountantsanz.com and search ‘The AI-Driven Accountant’.